The News & What it Means – Major Storm but Still Time, Opportunity for Spring Planting

By John DePutter & Dave Milne –
March 19, 2019

The news:

“Record flooding in the Midwest is
cutting highways, saturating farms and driving hundreds from their homes in
hardest hit Nebraska.”

– Bloomberg, Mar. 18, 2019

What it means:

Major spring planting delays and an
increase in unseeded acres. Or does it?

Seeing
the headlines and the photos that have followed in the wake of last week’s
historic ‘bomb cyclone’ in parts of the American Midwest and Plains, it would
be natural to assume many farmers will struggle to get the 2019 crop in the
ground. In fact, the 2019 crop is probably the last thing on the minds of many
as they assess extensive property and livestock losses.

Yet,
somehow the storm and its impact hasn’t created much coverage in the mainstream
press, nor has it really fired up the futures market. Admittedly, corn futures
have crept higher in recent days in recognition of the likelihood of planting
delays, but that upward action was already beginning before the storm hit.

As the May corn chart here shows, futures have shown signs of life lately, but nothing you would expect to see in the throes of a true weather market.

So, what gives?

For
starters, it’s still relatively early. Yes, planting is underway in the more
southern production regions and progress is somewhat behind. In Louisiana for
example, only 3% of the corn crop was in the ground as of Sunday, versus 7%
last year and 8% on average. And in Mississippi, corn was just 1% of the corn
was in compared to 5% last year and 2% on average.

However,
those states are small players compared to the Midwest where planting doesn’t
really get underway in earnest until about mid-April. That means there’s still
plenty of time for the weather to straighten around in those areas that are now
simply dealing with wet soils rather than significant property damage. It also
bears noting that corn planting in Texas is actually running ahead of the normal
pace at 26% complete as of Sunday.

Further,
the 3- to 4-week outlook from the National Weather Service suggests generally
below normal precipitation across the northern Plains into the Great Lakes
region, with most of the Midwest seeing only equal chances of above or below
normal precipitation. Most of the northern areas and eastern half of the US is
also expected to see above normal temperatures through the same period.

And
of course, one should never underestimate the ability of American farmers to
get their crops in the ground when even the smallest window of opportunity eventually
opens. With today’s equipment, a major portion of the nationwide corn and
soybean crops can be planted within just a couple of weeks.

Weather is THE biggest factor for corn
and soybean prices in spring and summer. Keep
up on all the important weather developments (and market reactions) both at
home and abroad with our daily morning reports.